Earnings climbed for Blue Cross Blue Shield, declined for other Massachusetts health insurers in 2012
The state’s largest health insurer boosted its earnings in 2012, while three other Massachusetts health plans reported net income declines from the previous year as they absorbed a new state assessment to fund initiatives under a cost containment law, according to financial reports filed Friday with state regulators.
Health insurers also released executive compensation figures, with total pay increases ranging from 6.8 percent to 51.4 percent for chief executive officers.
Blue Cross Blue Shield of Massachusetts recorded net income of $163.9 million for the 12 months ending Dec. 31, a gain of 20.4 percent from the $136.1 million it earned in 2011. The better showing was powered by a sharp increase in fourth-quarter earnings and higher operating income in 2012, offsetting a modest drop in investment income for the year and a $65 million accounting charge taken to cover the cost of the new state assessment.
After a $149 million net loss in 2009, financial results at Boston-based Blue Cross have climbed steadily over the past three years as the insurer has focused on strengthening its business and introducing products aimed at slowing the growth in premiums.
“We’ve made a concerted effort to grab hold of our company and get costs in line with revenues,” Blue Cross chief financial officer Allen Maltz said.
Harvard Pilgrim Health Care managed net income of $22.5 million for 2012, a 75.9 percent plunge from the $93.5 million earned by the Wellesley-based insurer in 2011.
The falloff stemmed in part from a fourth-quarter operating loss reflecting Harvard Pilgrim’s $21 million writeoff for the state assessment. “If we hadn’t had that assessment, we would have been on budget,” said Charley Goheen, the insurer’s chief financial officer. He said Harvard Pilgrim might have made less money, but the drop would have been narrower.
“It’s getting tougher,” Goheen said. “It’s a very competitive business.” But he added that Harvard Pilgrim hopes to improve its prospects by reentering the Medicare Advantage business and expanding out of state in Connecticut, New Hampshire, and Maine.
The state assessment amounted to $14.2 million for Tufts Health Plan, lowering its 2012 net income to $103.4 million. That was down 6 percent from the $110 million earned by the Watertown-based insurer in 2011. Without its charge taken for the assessment, Tufts would have registered higher earnings last year, said chief financial officer Umesh Kurpad.
Kurpad said Tufts rang up strong revenue from its commercial and Medicare insurance lines ,but suffered losses in its Medicaid business due to a lack of adequate rates from the government program that insures low-income residents. “That’s going to be a headwind for the coming year," said Kurpad, who warned state and federal cuts and the implementation of the federal health care overhaul could create “turbulence” for the insurance business.
Fallon Community Health Plan, based in Worcester, posted net income of $15.3 million last year, down 60.2 percent from its income of $38.5 million in 2011. The insurer cited a 2012 operating loss partly reflecting a $7.2 million writeoff to close its pension plan.
The insurers’ financial reports were recorded with the state Division of Insurance.
Robert Weisman can be reached at firstname.lastname@example.org.